Leasing, due to tax benefits, is a popular form of financing the purchase of vehicles among entrepreneurs. However, many leasing companies are also targeting individuals. So we checked what is consumer leasing and how it looks compared to a car loan.
Consumer leasing is not particularly popular among Poles. It results from a firmly rooted attachment to owning things. Leasing disturbs this order because its mechanism is based on the lease of the item over the whole financing period. There is no question of property law. However, it is worth remembering about consumer leasing when planning a vehicle purchase, because it can be an interesting alternative to car loans.
What is consumer leasing?
Consumer leasing, also known as private one, is a form of a civil law contract addressed to individual customers who do not run a business. Thanks to this solution, it is possible to use the vehicle for a certain period of time in exchange for a fixed remuneration for the benefit of the lessor . It is the leasing company that purchases the car and leases it to the consumer provided that he fulfills the terms of the contract. Until the final repayment of the liability, the customer is not the owner of the vehicle, and the registration document contains the data of the leasing company.
When deciding on consumer leasing, one must take into account the necessity of making own contribution, also called the initial rent . This element takes the value from one to several dozen percent of the value of the subject of the contract. Other charges that the lessee must expect are regular installments, payable at the agreed time, and car repurchase. The last parameter refers to the possibility of buying the vehicle over after the end of the contract. This fee is usually 1% of the car’s initial value.
Attention to additional costs
The aforementioned fees constitute the core of leasing offers proposed to clients. However, before signing the contract, it is important to verify the tables of fees and commissions carefully as there may be additional and completely unobvious charges. And so for the registration of the car by a leasing company, or consent to the use of a vehicle, you can even pay a few hundred zlotys. The next costs are associated, for example, with the authorization to travel the car leased abroad or with the fee for administering the vehicle insurance for each year of the policy.
What is a car loan?
A car loan is a purposeful commitment for the purchase of a vehicle, i.e. a car, a truck, a motorcycle, a quad, a caravan or even a motorboat. Unlike consumer leasing, the borrower has the impression that he is the owner of the vehicle both during and after the contract. It is difficult to talk about real property here, because in order to minimize the risk, banks apply additional security directly related to the subject of financing, for example, transfer of ownership to collateral, registered pledge or vehicle card deposit. You also have to take into account the necessity to buy an AC policy and transfer it to the bank.
The cost of the loan consists of a commission for granting the loan and variable interest rate, the amount of which is determined by the WIBOR rate subject to fluctuations and the bank’s fixed margin. The potential borrower must also be ready to cover all fees related to loan security . Consolation is that in exchange for it can count on a clear reduction in interest rates.
You will not go without verification of creditworthiness
There is an error in who assumes that one of the described solutions is available without having to undergo the verification of the ability to service the debt. It happens that leasing companies offer to process applications in a simplified procedure, but this facility is reserved for a specific group of vehicles or requires payment of an increased initial fee . Of course, lessors also reserve the right to apply for additional documents or clarifications in the course of considering the application.
In the standard procedure, both banks and leasing companies, in addition to documents confirming the identity of the applicant, will also require confirmation of income . For this purpose, they may ask for a certificate of employment, an account statement confirming the receipts of the remuneration declared in the application, or the documents of the person guaranteeing the commitment. Before granting financing, the bank or leasing company will also verify the customer at the Credit Information Bureau (BIK).
Consumer leasing versus a car loan
In order to quickly and easily combine consumer leasing with a car loan, we have prepared a table presenting the most important common features and differences of the described solutions.
|Consumer leasing||Car loan|
|Ownership of the financed subject||During the contract, the owner of the vehicle is a leasing company. After its completion, you can buy the vehicle.||The vehicle is owned by the borrower, while the car secures the loan throughout the financing period|
|Necessary formalities||Only documents confirming identity are required in the simplified procedure. In the standard procedure, you need to document income, e.g. on the basis of an account statement||In addition to documents directly related to the borrower, it is also required to present the vehicle documentation in order to verify the value of the collateral|
|Standard costs||Own contribution, leasing installment, purchase (usually 1% from the initial value of the vehicle)||Commission for granting a loan, principal and interest installment, fees for establishing a loan security|
|Limit of kilometers||Yes – after exceeding the set limit, the leasing company may charge additional fees, eg 50 grams per kilometer||No|
|AC policy required||Yes||Yes|
|Car repairs and service||At authorized service stations||In points selected by the borrower|
|The possibility of using by third parties||Yes (after receiving a fee from the leasing company)||Yes|
Leasing or credit – what to choose?
There is no unambiguous answer to this question. It all depends on the individual preferences and expectations of the applicant. One thing is certain – when comparing the received proposals, it is worth going beyond the standard offer and verifying, often well camouflaged, the contents of the table of fees and commissions. It may turn out that the cheaper option, after purchasing additional services, will lose its original qualities.